You can now upload your images to go along with your web items by clicking the image uploaded at the bottom of the web items edit page.
This completes the changes for handling image uploads.
The separate "web files" function (where you previously separately managed your image uploads) has consequently been retired.
Anyone still needing to upload "documents" to their website can post a link (via web items) to their document/file residing on something like onedrive or google drive instead.